PPE suppliers with political ties awarded contracts without tender

The National Audit Office (NAO) conducted an investigation into the government’s lack of transparency when awarding contracts valued at £18bn to tackle coronavirus.

The NAO found that the government failed to provide adequate documentation of some key decisions, such as why particular suppliers were chosen or how government identified and managed potential conflicts of interest, in the awarding of some contracts while procuring large volumes of goods and services at high speed to respond to the coronavirus pandemic.

New contracts worth £17.3bn were awarded to suppliers, of which, £10.5bn were awarded directly without a competitive tender process.

The NAO said the government PPE team established a ‘high-priority lane’ to assess and process potential PPE leads referred by government officials, ministers’ offices, MPs and Lords, senior NHS staff and other health professionals.

The team considered that leads referred by these sources were ‘more credible’ or needed to be treated with more urgency.

About one in ten suppliers processed through the high-priority lane (47 out of 493) obtained contracts compared to less than one in a hundred suppliers that came through the ordinary lane (104 of 14,892).

The NAO said the sources of the referrals to the high-priority lane were not always documented in the case management system and the NAO found a case where a supplier, PestFix, was added to the high-priority lane in error.

Commenting on  UNISON assistant general secretary Christina McAnea said the system sounded like a ‘get-ritch-quick scheme’.

‘Billions of pounds of public money have been handed out with no proper checks and balances.

‘Without an open and transparent process, this looks suspiciously like ​ministers have been lining the ​pockets of ​their political pals.

‘This was vital equipment to keep health and care workers safe and halt the spread of the infection, not a get-rich-quick scheme.

‘Ministers must be held to account and the government gravy train, whether driven by favours or incompetence, has to stop.’

Personal protective equipment (PPE) accounted for 80% of the number of contracts awarded (more than 6,900 contracts) and 68% of the total value of contracts awarded (£12.3 bn), as  PPE needed to be procured quickly during the first few months of the pandemic, when global demand far exceeded supply.

For procurements where there is no competition, it is important that awarding bodies set out clearly why they have chosen a particular supplier and how any associated risks from a lack of competition have been identified and mitigated. This is to ensure public trust in the fairness of the procurement process.

In a selected sample of 20 contracts, the NAO found examples where departments failed to document key decisions, such as why they chose a particular supplier or used emergency procurement. And failed to document their consideration of risks, including how they had identified and managed any potential conflicts of interest.

The NAO found that some contracts were awarded retrospectively after work had already been carried out. For example, a £3.2 million contract was awarded to Deloitte to support the cross-government PPE team’s procurement of PPE on 21 July 2020, with the contract effective from 14 March 2020.

A clear trail of documents to support key procurement decisions was sometimes missing. A review of six PPE contracts found that, while there was evidence for most controls being applied, there were some gaps in the documentation, such as why some suppliers which had low due diligence ratings were awarded contracts.

NAO said Transparency is a key control to ensure accountability for decisions taken. However, many of the contracts awarded over this period have not been published in a timely manner.

Of the 1,644 contracts worth more than £25,000 awarded up to the end of July 2020, 55% had not had details published on Contracts Finder by 10 November 2020 and only 25% were published within the 90-day target.

For contracts of a higher value which are required to be published to the Official Journal of the European Union, DHSC published 89% of 871 contracts.

The NAO recommends that, should the need to procure significant volumes of goods with extreme urgency arise again, the government should identify and manage potential conflicts of interest and bias earlier in the procurement process.

The government should ensure that basic information on contracts are published within 90 days of award.

Gareth Davies, head of the NAO said: ‘At the start of the COVID-19 pandemic in the UK, the government had to procure large volumes of goods and services quickly whilst managing the increased risks this might entail.

‘While we recognise that these were exceptional circumstances, it remains essential that decisions are properly documented and made transparent if government is to maintain public trust that taxpayers’ money is being spent appropriately and fairly.

‘The evidence set out in our report shows that these standards of transparency and documentation were not consistently met in the first phase of the pandemic.’

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